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HealthSouth Commits to a Reimbursement Policy for Shareholder Proxy Nominations

By Steve Gavriliuc for CEOWORLD Magazine Updated:October 26, 2009

HealthSouth Corporation (NYSE: HLS) today announced it has amended its credit agreement and extended maturity of a portion of its term loan. A segment of the lenders under the term loan that has a current outstanding balance of approximately $750 million will extend the maturity for $300 million of that loan from March 2013 to September 2015, contingent on certain conditions.

The portion of the term loan maturing in 2013 will remain at the current interest rate of Libor plus 2.25 percent, while the portion with extended maturity will bear the interest rate of Libor plus 3.75 percent.

The credit agreement has been amended to allow, among other things, the Company to issue senior secured and unsecured notes in the bond market and increase the amounts the Company is able to spend on acquisitions and selected debt repurchases. The Company intends to file a Form 8-K, including a copy of the amended credit agreement, with the Securities and Exchange Commission on today. When filed, that Form 8-K will also be available on the Company’s Web site, www.healthsouth.com, in the investor section under SEC filings.

HealthSouth will become one of first public companies to adopt an alternative to the various initiatives relating to proxy access. “HealthSouth believes there is a close correlation between good governance and good performance,” said Jon F. Hanson, non-executive Chairman of the Board.

“By reimbursing shareholders under certain conditions for reasonable expenses relating to director nominations, we believe we will further enhance director accountability and permit shareholders to have a greater say in the running of their company. This far-reaching amendment to our Bylaws will be good for our shareholders, our Board and our Company.”

The Board also approved the general terms of an executive compensation recoupment, or clawback, policy. This policy will allow the Company in certain instances to require return of any bonus or incentive compensation paid to a member of senior management after January 1, 2010 if that officer engages in certain misconduct. The final terms of the policy will be included in a Form 8-K to be filed with the SEC when approved.

“Given the history of HealthSouth under its prior management team, we believe this Company should be innovative and a leader in corporate governance issues among public companies,” said Charles Elson, Director and Chairman of Nominating and Corporate Governance Committee. “Based on my experience, HealthSouth has become such a leader.” Mr. Elson is the Edgar S. Woolard, Jr. Chair in Corporate Governance and has served as the director of the John L.Weinberg Center for Corporate Governance at the University of Delaware.

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